Posted by Allison Wong on Wednesday November 26th, 2014

 

Behavioural economist and UCLA academic Professor Shlomo Benartzi attracted a packed out crowd at Customs House on 14 November, with 150 attendees from government, business, academia and the third sector joining to hear the findings of his latest research. He was joined by Mr Arun Abey (Chairman of ipac), Professor Dan Lovallo (Professor of Business Strategy, University of Sydney) and Ms Jerril Rechter (Chief Executive Officer, Victorian Health Promotion Foundation) for an interesting panel discussion.

Many people now spend a large proportion of their day online; however, understanding the ways we interact online and on our devices is still a relatively under-explored area in the behavioural literature. Professor Benartzi’s research has highlighted that not only is the Digital Revolution producing a new platform to deliver behavioural interventions, but it is also uncovering interesting differences between the decisions that people make online compared to offline. Given more and more government services are moving online, this has huge implications for policy makers.

Professor Benartzi identified four important findings:

 

1. Some Behavioural Tendencies Weaken Online

We know from the behavioural literature that defaults can be a powerful tool for overcoming status quo bias, with studies often showing that once defaulted in to a certain option, only a small minority of people tend to opt-out. This has been demonstrated through the often cited examples of defaults used in pension plans and organ donations.

However, Professor Benartzi’s research indicates that defaults can actually be far less ‘sticky’ and powerful when used online. In his talk, he referred to an intervention that assessed the best options for patients by measuring performance indicators of local hospitals. He found that, while it might make perfect sense to default people into the best performing hospital, people were actually much more suspicious of the default option online and more likely to opt-out. While opting out of defaults may be a friction point offline, in the online world the ease with which people can do it (with the click of a button) reduces its potency and reveals a human tendency to mistrust online defaults.

This obviously has important policy implications (as well as health implications at the individual level). When shown the hospital ratings and given the opportunity to make their own choice, people were much more likely to make the ‘common sense’ selection and choose the best performing hospital. As policy makers, we need to consider the unintended consequences that might occur from using online defaults. In this instance, the ability for people to make an active choice was actually much more powerful.

 

2. Some Behavioural Tendencies get Stronger Online

It’s not all bad news though, as some behavioural biases are actually found to be strengthened on-screen. Professor Benartzi‘s research reveals that people think and make decisions faster on-screen than they do off-screen. In fact, most people have often rated the visual appeal of a website after only 50 milliseconds. While we know how important simplicity and salience are when drafting communications, forms and letters in the offline world, these findings suggest that design is just as, if not even more, important online.

We know there are some interesting insights from eye-tracking technology that highlight where most people focus when they are reading letters (see page 10 of this report for more information). Using the same technology, Professor Benartzi has found that attention is also attracted in specific places on screens. When shown four evenly-sized boxes on a tablet, most people focused their attention on the top left-hand box. This finding changed depending on the layout, as when nine boxes were laid out evenly on screen, the vast majority of people looked at the centre of the page. In the online world where people are bombarded with more and more information, understanding where attention and focus are attracted can help in the design of more effective communication.

 

3. Some Behavioural Tendencies Are Unique to Online Behaviour

In the offline world, there has already been some fascinating research undertaken in to priming honesty, but Professor Benartzi’s research suggests the online environment can be more conducive to disclosure. Professor Benartzi suggested that people may be much more willing to disclose certain information when interacting with an app or a website. For example, he found that people are more likely to report unhealthy behaviours online, allowing for more appropriate treatment.

The flipside of this is that people may also be more likely to do things like order unhealthy food (or lots of food) if they order online, rather than if they have to encounter the judgment of restaurant wait staff. This is an important finding as more and more people move towards digital platforms for their transactions for things like online grocery shopping. Taking this into account, in the panel discussion Jerril Rechter mentioned some of the work that VicHealth is exploring in Victoria to offer people who are online shopping the option to shop only from a list of healthy foods.

 

4. Some Old Behavioural Tools Can be Used in New Ways

Technology now provides us with opportunities to use behavioural tools in new ways, to encourage positive behavioural change. Professor Benartzi gave an interesting example of how the empathy gap between our present self and future self can be closed on screen. He demonstrated this through a program that shows people age-enhanced versions of themselves to encourage increased retirement savings. On a sliding spectrum, the higher the individuals’ retirement savings, the happier the age-enhanced avatar appeared. The idea behind this device is to highlight that by closing the empathy gap, we are better able to connect with our future self, encouraging better decision making for the long-term. The Bank of America has also used this nudge – if you’re interested you can age-enhance an image of yourself on their website.

 

Thank you to Professor Benartzi and our panellists for an insightful discussion. Thanks also to our event partners - the Sydney University Business School and the United States Studies Centre.

For more information about this area of research and to try some of the online exercises that Professor Benartzi ran on the day, visit the Digitai website. His book ‘The Digital Mind: Why we don’t think clearly when we go online’ is due out in May 2015.

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